July 21, 2016 / 11:01 PM / a year ago

U.S. lawmaker urges openness in sugar trade deal with Mexico

NEW YORK (Reuters) - A U.S. senator who advocates sugar reform is pressing the Department of Commerce to seek public feedback on any sugar trade deal it negotiates with Mexico in talks now under way, according to a letter sent on Thursday.

Democrat Jeanne Shaheen raised concerns in a letter seen by Reuters that a controversial 2014 trade agreement for U.S. sugar imports from Mexico may be renegotiated without public comment from interested parties like sugar buyers and candy makers.

The Commerce Department and Mexican counterparts have begun talks to rework the deal, according to government and industry sources. The pact, which established quota and minimum prices for refined and raw sugar, was the outcome of a trade investigation that found Mexican millers were dumping cheap, subsidized sugar into the United States.

“Commerce is essentially re-writing agricultural policy outside of the Farm Bill,” Shaheen said in the letter to Commerce Secretary Penny Pritzker, referring to the five-year agricultural policy agreed on by Congress.

Shaheen slammed the current sugar agreement with Mexico, calling it a “clear example of the need for future policy to be crafted carefully.”

Mexican representatives were in Washington this week following discussions last week as well, sources said.

A Commerce Department official did not confirm or comment on the negotiation, but said public comments are typically solicited for any “material amendments” proposed.

Some U.S. refiners have said the existing agreements have wiped out their margins and starved them of supplies.

The U.S. Department of Agriculture (USDA) has upped raw sugar import quota on signs of tight supplies. But the price of U.S. domestic raw sugar on ICE Futures U.S. is still trading around 28 cents per lb, about a penny under April’s near four-year highs and not far below prices for some refined sugar, according to traders.

The U.S. side has proposed “tightening the definitions” for raw and refined sugar and also defining end users to ensure people know where the sugar is headed, said a source familiar with the agreements.

The Mexican industry wants to keep the existing restrictions that say as much as 53 percent of the total quota can enter as refined, the source said. An increasing amount of sugar is entering the United States, circumventing refiners, heightening competition that is lifting raw sugar prices.

Meanwhile, excess beet sugar inventories are growing as buyers shun genetically modified ingredients, or GMOs. Nearly all U.S. beet sugar is made from genetically-engineered seeds, and farmers are expected to plant a record crop next year.

Reporting by Chris Prentice; Additional reporting by Ana Isabel Martinez in Mexico City; Editing by Cynthia Osterman

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